Oil and gas operators are expected to drill around 30 exploration wells offshore Norway this year—just half the number of exploration wells from last year and the lowest number in nearly a decade and a half, the Norwegian Petroleum Directorate (NPD) said in its 2020 resource report on Tuesday.
The crash in oil prices and oil demand earlier this year led to operators significantly cutting their budgets, including for exploration, the Norwegian regulator said.
In recent years, activity has been high, but this year’s slump in prices, budgets, and exploration activity will snap the growth in exploration.
Norway has a lot of remaining resources yet to be discovered, and Western Europe’s largest oil and gas producer needs more discoveries soon if it is to sustain its oil production level after 2024.
"Without new discoveries, oil and gas production could decline rapidly after 2030. New exploration technology and big data analyses can contribute to more discoveries on a mature shelf", Torgeir Stordal, Director for Exploration at NPD, said in a statement.
Earlier this year, the latest investment survey by Statistics Norway showed that despite the coronavirus-induced crisis, investments in oil and gas activity in Norway are expected to rise by 1.6 percent this year compared to 2019, thanks to higher oil prices and the government’s tax relief package for the oil industry. Total investments in oil and gas activity in Norway in 2020, including pipeline transportation, are estimated at US$20.1 billion (184.6 billion Norwegian crowns), up by 2.4 percent compared to the estimate in the previous survey carried out in May 2020. Compared with the corresponding figure for 2019, oil and gas investment in Norway is now expected to increase by 1.6 percent, the August survey showed.
For 2021, investments are set to drop from the currently estimated 2020 level. Still, the estimate for next year is now 2.1 percent higher than in the May survey, according to Statistics Norway.
By Tsvetana Paraskova for Oilprice.com
